Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

ZOOZOO WINS THE TAX BATTLE!

Supreme Court’s verdict in Rs.11,000 crore Vodafone case

A big shot in the arm for global investment in India!

              One of the most sensational cases ever, in the history of Indian Income-tax, came to be decided by the Supreme Court on January, 20, 2012. The Vodafone ruling, involving a mammoth tax stake of around Rs.11,000 crores, which has been delivered in favour of the taxpayer and against the  revenue assumes great significance, since it has also reinforced the faith of the global investor community in the Indian judicial system.

THE BIG TAX CONTROVERSY

               The core controversy before the Apex Court was whether India could tax capital gains arising from sale of shares of overseas companies, merely because such companies had downstream subsidiaries in India. The tax authorities had contended that the sale of the share capital of a Cayman Islands company that ultimately held approximately 67 per cent in Hutchison Essar (now Vodafone Essar) gave rise to capital gains tax liability in India, and therefore, Vodafone was required to deduct tax on payments made to Hutchison for acquiring the shares. In response, Vodafone argued that the transaction was not taxable in India and that the Indian income-tax authorities did not have jurisdiction to proceed against them for any alleged failure to withhold tax. (more…)

CLUBBING PROVISIONS FOR MINOR’S INCOME!

Exemption for minor’s income fixed at Rs.1,500 in 1992

Has not been revised even after 20 years of the provision!

Until 1991-92, all income of a minor, other than that covered by the special clubbing provisions of Section 64 of the Income-tax Act was entitled to independent assessment in his own hands. Circumventing the said clubbing provisions not being difficult, a number of avenues for augmenting income and wealth assessable in the minor’s own hands were wide open. It was thus possible to avail of valuable tax savings through the independent tax assessments of minors.

Such independent income/wealth enjoyed by the minors became a source of envy for the Finance Minister, who while introducing the Finance Bill, 1992 struck a major blow on tax planning for minors by providing that all income/wealth of a minor would be liable to be clubbed with the income/wealth of his parent. Section 64(1A) thus provides that “in computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child.” (more…)

WELCOME RELIEF FOR HOUSING DEVELOPERS!

Gujarat HC confirms ITAT’s liberal interpretation on tax holiday for residential projects u/s. 80IB(10)

       Housing developers having undertaken the business of developing and building residential housing projects, with a view to avail 100% deduction in respect of their profits as prescribed under Section 80IB(10) of the Income-tax Act, can truly heave a sigh of relief, with the Gujarat High Court finally resolving some burning controversies raised by the Revenue over the past few years.

        Around 50 Tax Appeals filed by the Department have come to be recently disposed of under a consolidated order passed in the case of ‘Radhe Developers, Shakti Corporation & Others’ by the Bench comprising of Hon’ble Mr. Justice Akil Kureshi and Ms. Justice Sonia Gokani, who were called upon to decide two key contentions relating to eligibility for claim of deduction under Sec. 80IB(10). (more…)

PRACTICAL TIPS ON CLAIMING TAX REFUND

Although, tax refund must be claimed within one year from end of the assessment year, there is a remedy for belated & additional claims!  
 
                  There may be situations where considering the amount of tax deducted at source from the income of the taxpayer or the advance-tax paid by the taxpayer on his estimated income, the taxpayer becomes entitled to claim refund of income-tax, if such tax deducted or paid exceeds the actual income tax liability for the relevant assessment year. A taxpayer may also become entitled to refund of income-tax as a result of any order passed in appeal, rectification or revision, when the assessed taxable income has been reduced and he had paid excess tax earlier.

                  Section 237 of the Income-tax Act provides for granting of Refund of excess tax paid or deducted in the case of a taxpayer, where such tax exceeds the actual tax payable by him. (more…)

FISCAL RESOLUTIONS FOR THE NEW YEAR!

Managing your wealth requires more skill than creating it!
 
On this first working day of 2012, this is wishing all AM readers a very happy & prosperous New Year with some food for thought to make smart fiscal resolutions for the New Year! Always remember that “managing your wealth requires more skill than creating it.”

YOUR ‘WILL’ CAN MAKE THE WAY!

The importance of executing a Will has yet not been appreciated to its fullest extent in the Indian society. It is, therefore, not surprising to come across several cases where in pursuance to the death of an individual, there are several family disputes and practical problems in the absence of the Will by the deceased. Don’t forget that the execution of a Will is very simple and at the same time non-execution of the same can create several difficulties. (more…)

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